The document discusses the United Nations Global Compact (UNGC), a voluntary initiative for businesses to implement sustainable and socially responsible policies. It outlines key drivers for UNGC including market liberalization, globalization, and NGO activism putting pressure on companies. While UNGC can help fill governance gaps and mitigate risks, it is ultimately voluntary with no enforcement, and some argue it acts more to protect companies from regulation rather than enforce accountability.

1. WHY UNGC?
• Liberalization of markets – reduction of the
regulatory approach
• Emergence of global giants, consolidation of
market share
• Development of the ‘embedded firm’.
– Development of supplier networks in developing
countries

2. Key drivers of UNGC
Around the world
• NGO Activism
• Responsible investment
• Litigation
• Gov initiatives
Developing Countries
• Foreign customers
• Domestic consumers
• FDI
• Government

3. Key Drivers: NGO Activism
• Facilitators: IT (esp
Internet), media, etc.
• Boycotts, brand damage,
influence legislation,
domino effect
• e.g. Shell in Nigeria, Exxon
in Cameroon, Coca Cola,
Apparel Industry (Nike,
Gap), GMO, Wood
Products, etc.

4. MERITS
 Fill governance gap
 Socially Responsible
- human rights
- environment
- anti corruption
 Business Relevance
- mitigating legal risks
- mitigating reputational risk
- improved operating environment
- employee satisfaction
 UN Millennium Development Goals

5. DEMERITS
 No binding power
- voluntary action can never substitute regulation
 No effective monitoring power
- Ayoreo Indians in Paraguay
 Acts as the PRO of MNCs
- excuse and argument to oppose any binding
national regulation on corporate accountability
- 2 of the 3 representatives of last UNGC where
from MNCs
- entry door to increase corporate influence on
the policies of the United Nations

6. CONCLUSION